How to Avoid the 6 Most Annoying Credit Card Fees

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Our personal finance experts dish out the most trusted credit card advice on the web, including juicy tips, tricks and secrets from inside the credit card industry.

Ah, the dream of completely fee-free, 0% credit card!

Unfortunately, when you wake up, you realize you’re paying all sorts of fees on that old card you still use. You finally resolve to get a new card that will be kinder on your bank account, but you’re not sure how to proceed.

Here are six ways to cut credit card fees down to size, or better yet, simply eliminate them:

1. Annual Fees

This is the greediest of all the fees. It’s simply extra money the credit card issuer collects, perhaps to help pay for its fancy headquarters. If you see an annual fee attached to a card offer, and you don’t think the perks are worth it, keep on looking.

There are dozens of great credit cards out there that charge no annual fee. Don’t be confused by cards that waive the fee in the first year only — that’s just a marketing ploy.

2. Cash Advance Fees

There is no problem with this fee because as a responsible consumer, you are NEVER going to get a cash advance. Credit cards charge a fee of up to 6 percent to advance money and then charge interest on it.

Do this instead — add a debit card to your wallet and always keeps some emergency money in your bank account. Debit cards are fee- and interest-free. ‘Nuff said.

Or, if you really want cash, you could simply go to a retail or grocery store that offers cash back, buy something cheap like a stick of gum and then ask for the cash you need without the excessive fees.

3. Balance Transfer Fees

This is another marketing ploy. Some credit cards promise a period of 0% interest on balance transfers, say six months. That’s fine, until you learn that (a) you have to pay a 4 percent transfer fee and (b) the interest rate zooms up to 15, 20, even 29 percent after the end of the grace period.

If you don’t pay off the balance during this period, you’ll have to pay retroactive interest charges. A better idea is to negotiate a lower interest rate with your card provider, under threat that you’ll transfer out otherwise.

However, if you want to consolidate debts on an account with a lower interest rate, and if you can pay off the balance in full before the introductory period, then a balance transfer card may ultimately be a good idea.

4. Late Payment Fees

OK, this one is on you. Yes, these fees are ridiculous because you are already being charged interest. However, the solution is simple — set up autopay with your credit card issuer.

This gives the issuer permission to transfer at least the minimum payment out of your bank account each month. The transfer is free and you’ll never miss a payment again — just be sure to keep a little extra money in your bank account.

5. Finance Fees

This is the APR the credit card charges on balances that you haven’t fully paid by the due date. Each issuer must disclose its APR, but beware of those that charge interest every day, not just after the due date.

The best solution is to curb your enthusiasm for spending more than you can pay off each month. The lower your old balance, the less they can charge.

6. Overlimit Fees

If a purchase makes your balance exceed your credit limit, the issuer will charge an over-the-limit fee and, if it rejects other purchases already in the queue, you could be hit by a returned payment fee.

Once again, the solution is to control your spending. If you have a good credit history, ask your issuer to increase your credit line.

Editorial Note: Opinions expressed here are the author's alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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About the Author

Eric Bank

Based in Chicago, Eric Bank has been writing business-related articles since 1985, and science articles since 2010. His articles have appeared in "PC Magazine" and on numerous websites. He holds a B.S. in biology and an M.B.A. from New York University. He also holds an M.S. in finance from DePaul University.

Editorial Note: This content is not provided or commissioned by the credit card issuer. Opinions expressed here are the author's alone, not those of the credit card issuer, and have not been reviewed, approved, or otherwise endorsed by the credit card issuer. Every reasonable effort has been made to maintain accurate information, however all credit card information is presented without warranty. After you click on an offer you will be directed to the credit card issuer's web site where you can review the terms and conditions for your offer.

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